Why Kevin O'Leary Is Betting On Bill Ackman's Pershing Square Tontine SPAC

Investor Kevin O’Leary presented at the inaugural Benzinga Global Small Cap Conference. Among the many topics he covered in his presentation was his thoughts on SPACs.

O’Leary On SPACs: SPACs are a competition to private equity, O’Leary told Benzinga's Jason Raznick on Wednesday.

“The key to SPACs is the sponsor,” O’Leary said. Among the SPACs that O’Leary has bought are ones from Bill Ackman, Michael Klein and Alec Gores.

“I only buy the deals where I know the sponsor has been a player successfully in private equity.”

The team at Ackman’s SPAC, which is Pershing Square Tontine (NASDAQ: PSTH), is smart, O’Leary said.

“They’re not gonna do stupid deals — that’s your assumption," he said.

More than 200 SPACs exist, and O’Leary said some of the management teams are doing very speculative deals that he doesn’t want to buy into.

“If you’re going to buy a SPAC, make sure your horse and your jockey are proven winners.”

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The SPAC Picks: Shares of Pershing Square Tontine are up 12% in the last month and at $25.62 are trading at a premium to their $20 offering level.

The SPAC was the largest done in 2020 and has been rumored to merge with Bloomberg, Stripe and other unicorns.

Alec Gores is behind several SPACs including Gores Holdings III (NASDAQ: GRSH) and Gores Holdings V (NASDAQ: GRSV), which are still seeking targets.

Gores Holdings IV (NASDAQ: GHIV) is merging with United Wholesale Mortgage. Luminar Technologies (NASDAQ: LAZR) went public via a previous Gores-sponsored SPAC. Gores also took Hostess Brands (NASDAQ: TWNK) public via a SPAC.

There are several Churchill Capital SPACs from Klein, including Churchill Capital Corp II (NYSE: CCX), Churchill Capital Corp IV (NYSE: CCIV) and Churchill Capital Corp V (NYSE: CCV), that are still seeking a target company.

Klein’s Churchill Capital Corp III merged with MultiPlan Corporation (NYSE: MPLN). Another Klein SPAC became Clarivate Analytics (NYSE: CCC).

Benzinga CEO Jason Raznick, left, and "Shark Tank" judge Kevin O'Leary. Benzinga file photo by Dustin Blitchok.